Question 1

Price discrimination is illegal under the

Accepted Answer

A) Sherman Act. 
B) Consumer Goods Pricing Act. 
C) Robinson-Patman Act. 
D) Federal Trade Commission Act. 
E) Anti-Competitive Act. 
A) Sherman Act. 
B) Consumer Goods Pricing Act. 
C) Robinson-Patman Act. 
D) Federal Trade Commission Act. 
E) Anti-Competitive Act.

Question 2

Which of the following statements regarding price cutting is most accurate?

Accepted Answer

A) Marketers should only consider price cutting if primary demand for a product class will remain stable. 
B) Marketers should only consider price cutting if the price cut can be made across all items in a product line and all product lines in a product mix. 
C) Marketers should only consider price cutting if the price cut is confined to customers within specific target market segments. 
D) Marketers should only consider price cutting if the firm also increases advertising. 
E) Marketers should never consider price cutting unless a product is in the introductory stage of its product life cycle. 
A) Marketers should only consider price cutting if primary demand for a product class will remain stable. 
B) Marketers should only consider price cutting if the price cut can be made across all items in a product line and all product lines in a product mix. 
C) Marketers should only consider price cutting if the price cut is confined to customers within specific target market segments. 
D) Marketers should only consider price cutting if the firm also increases advertising. 
E) Marketers should never consider price cutting unless a product is in the introductory stage of its product life cycle.

Question 3

Target return-on-sales pricing refers to

Accepted Answer

A) adjusting the price of a product so it is "in line" with that of its largest competitor. 
B) setting the price of a line of products at a number of different price points. 
C) adding a fixed percentage to the cost of all items in a specific product class. 
D) setting prices to achieve a profit that is a specified percentage of the sales volume. 
E) setting a price based on a specific annual dollar target profit volume. 
A) adjusting the price of a product so it is "in line" with that of its largest competitor. 
B) setting the price of a line of products at a number of different price points. 
C) adding a fixed percentage to the cost of all items in a specific product class. 
D) setting prices to achieve a profit that is a specified percentage of the sales volume. 
E) setting a price based on a specific annual dollar target profit volume.

Question 4

A Patek Philippe Sky Moon Tourbillion men's wristwatch is among the most expensive in the world, costing more than $1.5 million in 2013. This is an example of a __________ strategy.

Accepted Answer

A) penetration pricing 
B) target pricing 
C) bundle pricing 
D) loss-leader pricing 
E) prestige pricing 
A) penetration pricing 
B) target pricing 
C) bundle pricing 
D) loss-leader pricing 
E) prestige pricing

Question 5

Determining cost, volume, and profit relationships occurs during __________ of the price-setting process.

Accepted Answer

A) Step 2 
B) Step 3 
C) Step 4 
D) Step 5 
E) Step 6 
A) Step 2 
B) Step 3 
C) Step 4 
D) Step 5 
E) Step 6

Question 6

A hardware store advertises a ⅜-inch Black and Decker Power Drill for $29.95. You enter the store intending to purchase the drill. The salesperson informs you that they are all sold out. She tells you that the "sale" drills were factory seconds and that if you are going to be doing any kind of serious woodworking, you should buy the Model 3309, which sells for $49.99. This scenario has elements of which type of illegal pricing practice?

Accepted Answer

A) predatory pricing 
B) price discrimination 
C) price fixing 
D) bait and switch 
E) conditional bargains 
A) predatory pricing 
B) price discrimination 
C) price fixing 
D) bait and switch 
E) conditional bargains

Question 7

Target return-on-investment pricing refers to

Accepted Answer

A) setting a price to achieve an annual target ROA. 
B) adding a fixed percentage to the cost of all items in a specific product class. 
C) setting prices to achieve a profit that is a specified percentage of the sales volume. 
D) setting a price to achieve an annual target ROI. 
E) setting a price based on an annual specific dollar target volume of profit. 
A) setting a price to achieve an annual target ROA. 
B) adding a fixed percentage to the cost of all items in a specific product class. 
C) setting prices to achieve a profit that is a specified percentage of the sales volume. 
D) setting a price to achieve an annual target ROI. 
E) setting a price based on an annual specific dollar target volume of profit.

Question 8

Yield management is considered to be a __________ approach to pricing.

Accepted Answer

A) demand-oriented 
B) cost-oriented 
C) profit-oriented 
D) competition-oriented 
E) service-oriented 
A) demand-oriented 
B) cost-oriented 
C) profit-oriented 
D) competition-oriented 
E) service-oriented

Question 9

Rather than billing clients by the hour, some lawyers and their clients agree on a fixed fee based on expected costs plus an agreed upon level of profit for the law firm. Which pricing approach are they using?

Accepted Answer

A) target pricing 
B) cost-plus pricing 
C) customary pricing 
D) experience curve pricing 
E) bundle pricing 
A) target pricing 
B) cost-plus pricing 
C) customary pricing 
D) experience curve pricing 
E) bundle pricing

Question 10

In some cases, manufacturers design products for different price points and retailers apply __________ to achieve the three or four different price points offered to consumers.

Accepted Answer

A) progressively higher markup percentages 
B) different markup percentages depending on how long the item remains on their shelves 
C) above-, at-, or below-market pricing 
D) approximately the same markup percentages 
E) elasticity of demand pricing calculations 
A) progressively higher markup percentages 
B) different markup percentages depending on how long the item remains on their shelves 
C) above-, at-, or below-market pricing 
D) approximately the same markup percentages 
E) elasticity of demand pricing calculations

Question 11

The first Apple iPhone was introduced in 2007 at an initial price of $600. People waited in line overnight so they could be one of the first to own this unique smartphone. Which pricing strategy did Apple use to help recoup its costs for developing the smartphone?

Accepted Answer

A) penetration pricing 
B) experience curve pricing 
C) customary pricing 
D) skimming pricing 
E) target pricing 
A) penetration pricing 
B) experience curve pricing 
C) customary pricing 
D) skimming pricing 
E) target pricing

Question 12

With a cost-oriented pricing strategy, a price setter stresses the __________ side of the pricing problem and the price is set by looking at __________.

Accepted Answer

A) demand; revenue 
B) production and marketing; profit 
C) demand; target sales 
D) cost; production and marketing costs 
E) cost; consumer tastes 
A) demand; revenue 
B) production and marketing; profit 
C) demand; target sales 
D) cost; production and marketing costs 
E) cost; consumer tastes

Question 13

Setting the price of a line of products at a number of different specific price points is referred to as

Accepted Answer

A) odd-even pricing. 
B) bundle pricing. 
C) cost-plus pricing. 
D) price lining. 
E) prestige pricing. 
A) odd-even pricing. 
B) bundle pricing. 
C) cost-plus pricing. 
D) price lining. 
E) prestige pricing.

Question 14

Skimming pricing refers to

Accepted Answer

A) setting the lowest initial price possible when introducing a new or innovative product in order to "skim" sales from competitors. 
B) setting the highest initial price that customers who really desire the product are willing to pay. 
C) setting a low initial price on a new product to appeal immediately to the mass market. 
D) the practice of replacing promotional allowances with higher manufacturer list prices. 
E) setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it. 
A) setting the lowest initial price possible when introducing a new or innovative product in order to "skim" sales from competitors. 
B) setting the highest initial price that customers who really desire the product are willing to pay. 
C) setting a low initial price on a new product to appeal immediately to the mass market. 
D) the practice of replacing promotional allowances with higher manufacturer list prices. 
E) setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

Question 15

The retail price of DVD players has decreased from $900 in the mid-1990s to about $50 today. This is due in large part to

Accepted Answer

A) skimming pricing. 
B) prestige pricing. 
C) odd-even pricing. 
D) customary pricing. 
E) experience curve pricing. 
A) skimming pricing. 
B) prestige pricing. 
C) odd-even pricing. 
D) customary pricing. 
E) experience curve pricing.

Question 16

Different brands within a company's product line generally have different profit margins; for example, items with higher price lines have higher profit margins. Assume that Nike Variety tennis shoes have variable costs of $6 and sell for $24. Also assume that Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48, but when fixed overhead is added, the shoe is unprofitable by $2 per pair. Which statement is most accurate regarding Nike's pricing approach with these two product lines?

Accepted Answer

A) Demand for each shoe line is unrelated to price. 
B) Nike is using a cost-plus-percentage-of-cost pricing strategy. 
C) Nike is using a product-line pricing strategy. 
D) Demand for each shoe line is unrelated to product quality. 
E) Consumers do not use price as an indication of quality. 
A) Demand for each shoe line is unrelated to price. 
B) Nike is using a cost-plus-percentage-of-cost pricing strategy. 
C) Nike is using a product-line pricing strategy. 
D) Demand for each shoe line is unrelated to product quality. 
E) Consumers do not use price as an indication of quality.

Question 17

Which of the following statements regarding price lining is most accurate?

Accepted Answer

A) In order for price lining to be effective, there should be at least five specified price points. 
B) Price lining assumes that demand is inelastic at each price point but elastic between price points. 
C) Price lining assumes that demand is elastic at each price point but inelastic between price points. 
D) Price lining is the preferred pricing strategy for governmental contracts. 
E) Price lining is the same as above-, at-, or below-market pricing. 
A) In order for price lining to be effective, there should be at least five specified price points. 
B) Price lining assumes that demand is inelastic at each price point but elastic between price points. 
C) Price lining assumes that demand is elastic at each price point but inelastic between price points. 
D) Price lining is the preferred pricing strategy for governmental contracts. 
E) Price lining is the same as above-, at-, or below-market pricing.

Question 18

Using __________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and additional store traffic.

Accepted Answer

A) customary pricing 
B) below-market pricing 
C) prestige pricing 
D) penetration pricing 
E) loss-leader pricing 
A) customary pricing 
B) below-market pricing 
C) prestige pricing 
D) penetration pricing 
E) loss-leader pricing

Question 19

Price war refers to

Accepted Answer

A) competition between sellers and resellers to maintain or attain the largest market share of potential customers. 
B) conflicts between manufacturers and distributors regarding acceptable percentages they each charge relative to one another. 
C) when one channel member believes another channel member is engaged in pricing behavior that prevents it from achieving its profitability goals. 
D) the successive price cutting by competitors to increase or maintain their unit sales or market share. 
E) the practice of replacing promotional allowances with lower manufacturer list prices. 
A) competition between sellers and resellers to maintain or attain the largest market share of potential customers. 
B) conflicts between manufacturers and distributors regarding acceptable percentages they each charge relative to one another. 
C) when one channel member believes another channel member is engaged in pricing behavior that prevents it from achieving its profitability goals. 
D) the successive price cutting by competitors to increase or maintain their unit sales or market share. 
E) the practice of replacing promotional allowances with lower manufacturer list prices.

Question 20

According to the textbook, Revlon cosmetics uses __________ pricing.

Accepted Answer

A) above-market 
B) at-market 
C) below-market 
D) prestige pricing 
E) everyday low pricing 
A) above-market 
B) at-market 
C) below-market 
D) prestige pricing 
E) everyday low pricing

Exam 14: Arriving at the Final Price

Price discrimination is illegal under the

Which of the following statements regarding price cutting is most accurate?

Target return-on-sales pricing refers to

A Patek Philippe Sky Moon Tourbillion men's wristwatch is among the most expensive in the world, costing more than $1.5 million in 2013. This is an example of a __________ strategy.

Determining cost, volume, and profit relationships occurs during __________ of the price-setting process.

Target return-on-investment pricing refers to

Yield management is considered to be a __________ approach to pricing.

Rather than billing clients by the hour, some lawyers and their clients agree on a fixed fee based on expected costs plus an agreed upon level of profit for the law firm. Which pricing approach are they using?

In some cases, manufacturers design products for different price points and retailers apply __________ to achieve the three or four different price points offered to consumers.

The first Apple iPhone was introduced in 2007 at an initial price of $600. People waited in line overnight so they could be one of the first to own this unique smartphone. Which pricing strategy did Apple use to help recoup its costs for developing the smartphone?

With a cost-oriented pricing strategy, a price setter stresses the __________ side of the pricing problem and the price is set by looking at __________.

Setting the price of a line of products at a number of different specific price points is referred to as

Skimming pricing refers to

The retail price of DVD players has decreased from $900 in the mid-1990s to about $50 today. This is due in large part to

Which of the following statements regarding price lining is most accurate?

Using __________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and additional store traffic.

Price war refers to

According to the textbook, Revlon cosmetics uses __________ pricing.

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Scanning the Marketing Environment

Ethical and Social Responsibility for Sustainable Marketing

Understanding Consumer Behavior

Understanding Organizations As Customers

Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

Market Segmentation Targeting and Positioning

Developing New Products and Services

Managing Successful Products Services and Brands

Services Marketing

Building the Price Foundation

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Integrated Marketing Communications and Direct Marketing

Advertising Sales Promotion and Public Relations

Using Social Media and Mobile Marketing to Connect With Consumers

Personal Selling and Sales Management

Implementing Interactive and Multichannel Marketing

Pulling It All Together: the Strategic Marketing Process

Financial Aspects of Marketing

Building an Effective Marketing Plan

Filters

With a cost-oriented pricing strategy, a price setter stresses the side of the pricing problem and the price is set by looking at .